Monthly Archives: May 2008

After the US, India is worst-hit market when it comes to the postponement of IPOs in the first quarter of 2008. Out of the twenty four billion dollar worth of IPOs that were postponed, US accounted for $6.12 billion while the figure for Indian companies stood at $5.98 billion. The decision to defer or shelve IPOs has been taken because of market sentiments and the global credit crisis. Read More »

Godrej Properties Ltd, Real estate arm of the Godrej Group, declared that it has filed the Draft Red Herring Prospectus (DHRP) with SEBI for an IPO of approx seven million shares.

According to a company statement, the firm proposes an IPO of 9,429,750 equity shares of ten rupees each through 100% book building process to part finance this plan. ICICI Securities Ltd and Kotak Mahindra Capital Company Limited are the BRLMs for the Issue. Read More »

South Mumbai has always been the preferred home to Mumbai’s upper crust for years. But now with virtually no land to be had in the Island City, the elite are moving into the suburbs and Bandra seems to be the hot new destination.
Malabar Hill, home to the city’s elite and till now the most famous of addresses in South Mumbai, is facing serious competition from bandra, popularly known as the Queen of the suburbs. Read More »

Panaji, May 28: Directorate of Enforcement has initiated show-cause notices against the foreigners who have brought properties allegedly in the state violating of Foreign Exchange Management Act.

The notices issued directly to the parties and also through the state government has asked why their properties involved in the contravension of the FEMA should not be confiscated to the central government account in terms of Section 13 (2) of FEMA 1999.

All the respondents (foreigners) have to appear in person or through legal practitioner at DoEs Mumbai office at different dates as mentioned in the notice.

Goa, the erstwhile Portuguese colony, woke up to the grim reality of losing its large chunk of lands to the foreigners allegedly in violation of FEMA. The state government in their report presented on the floor of the house sighted 392 such cases and formed a high level Anupam Kishore committee to probe into the violations.

The committee, prima facie, had found violations in 298 cases, which were referred to Directorate of Enforcement and Reserve Bank of India.

UK and Russians topped the list of foreigners who had invested in properties in Goa, mostly by forming companies.

Mr. Anil Kumar Singh,DoE’s assistant director, said,”Those cases where investment is above Rs 1 crore will be heard by special director while below Rs 1 crore will be referred to deputy director”.

He said that after the show-cause notice, the parties will be given an opportunity to present the case with their documentations.

Mr. Singh further said that most of the cases, the properties are below Rs 1 crore as they were purchased during 2000-2001 when real estate was not booming.

The DoE which is investigating the case through the show-cause notices issued has asked the parties to reply within 30 days as to why adjudication proceedings as contemplated under FEMA.

While the authorities, for past two years have been probing this huge chunk of cases, the DoE had to route some of the show-cause notices through Goa government as some addresses were not traceable.

The legal experts, however, feel that the property these property purchases are not in violation of FEMA.

Mr. Vikram Varma, a lawyer, who will be defending almost six cases of Britons, Russians and Italians before DoE, said, “Section 7 of FEMA mentions that nationals from Pakistan, Bangladesh, Sri Lanka, Afganisthan, China, Iran, Nepal or Bhutan cannot buy properties in India without prior permission of RBI”.

He said that union government has cleared 100% foreign direct investment (FDI) in tourism sector and Goa investments have come in that sector.

Mr. Varma said that as far as Goan properties are concerned, they are not agricultural properties. He further added, “They are either old Portuguese houses, apartments or small bunglows, which already have no objection certificate from panchayats”.

The legal expert also said that the companies which are registered in Goa are Indian entities and cannot be termed as foreign.

The private equity (PE) graph in India’s real estate sector is growing as high as its skyscrapers. The first five months of 2008 have PE commitments in Indian real estate companies surpassing the total PE investments committed in the whole of 2007, which is $3 billion.
Experts say PE funding in the second half of the year will be even more. This is a good time for PEs to invest as there is a liquidity crunch and valuations of many real estate players are down. PEs also expects a further lowering of valuations, somewhere in the tune of another 20%. Even as private equity money comes into the market, there are concerns among investors about the execution capabilities of many of developers. Read More »

Carrefour, the world’s second largest retailer, is considering the franchise model to initially expand its presence in the country and may announce a local partner in four weeks.
The French retailer, which has held talks with as many as 50 domestic business houses including Mumbai-based Wadia group and Mukesh Ambani-led Reliance Industries and real estate companies, such as DLF, in the past five years, may choose Parsvnath, a New Delhi-based real estate company, as its partner. Read More »

There is a severe shortage of houses in Mumbai but, there is no dearth of government agencies wanting to build houses. The Mumbai Metropolitan Region Development Authority (MMRDA), which normally plans and executes infrastructure projects, has proposed to build 5 lakh houses in the Mumbai Metropolitan Region (MMR) over the next 5 years.Maharashtra Housing and Area Development Authority (MHADA) and Slum Rehabilitation Authority (SRA) are other agencies involved in similar activities. Read More »

Many expect a further correction in home prices in India. Since the volumes of property transactions are going down, hence the asking price for property will also go down. Additionally, over-supply of property is posing as a major reason for the slow down in Real Estate prices.Recent media reports have also suggested the same trend. Reports suggest that Real Estate Prices in Mumbai, Bangalore, Pune, and National Capital Region have corrected 15-20% in the first quarter of this year. Market-watchers say that this trend will be repeated across the Tier II cities and suburbs too. No wonder property developers are wooing prospective users with all sorts of offers. Some are even offering lower EMIs for flats while some are offering goodies like cars along with property. Still others are wavering off the stamp duty prices.
Are the property prices coming down in your area? Is the property slow down really impacting the end user in a major way? Should the home seekers cheer for some reasons? Is there a possibility of a market dive? Or is this a temporary phase in the housing segment?

The number of commercial property loans in default has soared 400% in just 1years, according to a report.
The study of bank lending to the commercial property industry illustrates that while the amount lent continued to rise in 2007, nearly four hundred loans slipped into default, up from fewer than eighty in 2006.
Although the collective value of the loans – at £250m – is somewhat small, it suggests that a increasing number of smaller property investors and developers are failing because of the present financial crisis.
Unexpectedly, the number of commercial property loans that are in breach of financial covenants, but not yet in default, improved over the year. Loan breaches reduced from 1,900 – 1,050, suggesting banks are working harder to resolve debt problems before they move to default.

As the four-year bull run in the Indian market went into a sharp correction early this year, foreign investors quietly withdrew part of their holdings in leading stocks while retail investors bought into them.
Domestic investors(including institutions, MFs and retail investors)were net buyers in those top companies. These entities together bought around 1.1 percentage point stake in these companies, the highest ever in 28 quarters. During the quarter, retail investors too increased their stake by 0.4 percentage points to 14.4%, the first hike in stakes in two years. Read More »

Some things make the Reserve Bank of India (RBI) paranoid. The invasion of foreign money in the Indian property market has always been a familiar theme that rang alarm bells on Mint Street — the central bank’s headquarters.

Whenever it sensed an alarm, the regulator moved in to clamp down on such money flows. Even foreign venture capital funds opening shops here are asked by RBI to give an undertaking that the money they raise will not go into real estate. Read More »

The Real estate industry in India has been growing by leaps and bounds in the past few years. However, the country still lacks a credible way to cross-check the price swings (real or reported) in the sector. For example, recent reports of residential prices cooling off in major cities of the country could not be verified. Read More »

With Gurgaon becoming a popular choice for people looking for a home, the land for residential development is shrinking. To accommodate more people, the Haryana government has now removed the cap on the height of new highrises for both residential and commercial.

According to commissioner (town and country planning and urban estates) D S Dhesi, the norms on building height have been relaxed keeping in mind that there is increased housing demand in Gurgaon. He said, “There is technology available to construct such buildings and the builders have to follow the National Building Code. Moreover, the height of the highrises is subject to the clearance from Airports’ Authority of India (AAI)”. Read More »

Landmark Group declared that it would invest approx four thousand crore rupees in developing twelve properties across the north India in the coming three to four years.

Mr. Amit Kumar, Director, Landmark Group, said,“Currently, our twelve projects are undergoing in the North, which will be completed in the next three to four years. We will be investing about one billion dollar in developing these projects”. Further he added that the company would fund the projects through internal accruals and funds from private equities. Read More »

With bank credit drying up and private channels of funding getting expensive, several small developers are attempting to mop-up funds from retail investors by offering them a 12% guaranteed return for 5-9 years. Under the scheme, a retail investor has to buy a minimum area in the project and make an outright payment.

Delhi-based Piyush group, which is developing a 4 lakh square feet IT project in Faridabad, is offering a 12% return for nine years, but investor will have to make a minimum investment of Rs 20 lakh for 500 square feet. Piyush Group JMD Mr. Amit Goyal said, “We are offering a minimum guarantee to investors to cover their risk as the project is not yet ready and so can’t be leased out”. Read More »

Chandigarh, May 14:- The Chandigarh Housing Board, an autonomous body whose mandate is to provide housing to the middle class and economically weaker sections of the society, has indeed appeared as a money-making agent for the real estate developers.

Had the Chandigarh Administration or Chandigarh Housing Board (CHB) levied the same conversion charges to the real estate giant Parsvnath Developers Limited, which they are charging from the city industrialists, it would have earned the exchequer hundreds of crores more as compared to what they have earned now.

The prime commercial land, measuring 123.79 acres, which was earmarked to provide housing to Information Technology professionals, has been allotted by the Chandigarh Administration to Parsvnath for raising a huge housing complex next to the Rajiv Gandhi Technology Park.

The Chandigarh Administration allotted the land to Chandigarh Housing Board at the rate of Rs 308.77 for every square yard, i.e. Rs 18.5 crore for 123.79 acres.

The land was further sold to Parsvnath at Rs 829 crore. The actual value of the land, on the same formula, which the Chandigarh Administration is using in case of conversion charges of industrial land, would indicate that the Administration has lost approximately Rs 1.43 lakh per square yard.

According to information procured under the Right to Information Act, the ‘dubious’ role played by Chandigarh Housing Board has become quite evident.

When the CHB had to make houses for the middle class and economically weaker section, it got the land from the UT Administration at the rate of Rs 3,200 to Rs 5,900 per square yard.

The cost is bound to be automatically passed on to the consumer. The Income Tax department has already issued a notice to the CHB for the payment of tax on the amount already received from the developer.

The Tamil Nadu government today launched a website for online processing of land documents, including registration.
State minister for Revenue and Housing I Periasami unveiled the website at regional review conference organised jointy by the Land Resources department and Union Ministry of Rural Development. Read More »

Dewan Housing Finance Corporation reported a 11.78% rise in net profit to Rs 29.44 crore compared with Rs 13.51 crore during the corresponding period last year.The company’s income went up 45.4% to Rs 148.02 crore during January-March 2008 as against Rs 101.80 crore during the same period last year.

The Dewan Housing board recommended a 10% final dividend in addition to a 15% interim dividend paid during previous FY. Profit before depreciation and tax rose 10.7% to Rs 36.74 crore in the fourth quarter. Provisions for taxes rose 98% to Rs 6.95 crore in the fourth quarter of previous financial year. Read More »

German investment bank SachsenFonds (SF) has bought stake in four realty projects of London Stock Exchange listed, India-focussed realty fund Trikona Trinity Capital for Rs 607 crore ($150 million). Trikona has made returns of 115% in the transaction.
In the Delhi-based Uppal IT park, SF raised its stake from 8% to 33%. In the Hyderabad-based residential and retail project Manjira, SF picked up 41%, thereby completely owning the project.
In the MK Mall being developed by DB Realty in Mumbai, SF picked up 40% and now owns 100% of the mall. SF also took 15% stake in Delhi’s Luxor Cybercity, owned by Trikona. Read More »

The National Consumer Commission has held that a builder cannot deny compensation to a buyer on its failure to deliver a flat within a stipulated time.

The Commission rejected a contention of the builder, pleading that it should not be directed to pay any compensation for delay in delivery of flat as the prices of property had gone up.

The Commission said,”Such contention of any builder is unjustified and unreasonable because after sale of a property all the benefits accrue to the purchaser and not to the vendor. In any case, if it is accepted, the builders would earn crores of rupees by delaying the delivery”. Read More »

DUBAI:, A leading Indian public sector bank Bank of Baroda, has signed a memorandum of understanding with Dubai-based real estate company Dubai Properties for funding buyers of the latter’s products in the United Arab Emirates (UAE).

In a statement Dubai Properties declared that the contract has been signed between Bank of Baroda chief executive for Gulf operations A. K. Gupta and Dubai Properties chief executive M. S. Binbrek.

Bank of Baroda is the lone Indian bank providing complete banking services in the UAE.

It has 6 branches, in Dubai, Deira, Sharjah, Abu Dhabi, Al Ain and Ras Al Khaimah and an electronic banking service Unit at Jebel Ali near here. In Oman, the bank has three branches and in Bahrain one.